In the fall of 2007, the American Securitization Forum (ASF) commissioned a NERA team—led by Former Senior Vice President Dr. Chudozie Okongwu and Senior Vice President Dr. Faten Sabry—to conduct a study to evaluate the impact of securitization on consumers, investors, and the broader financial markets. A primary motivation for commissioning this study was ASF’s assessment that there was little academic or other research that attempted to evaluate and quantify the broader economic impact of securitization in an analytically rigorous way. The study, released on 17 June 2009, assesses the long term impact of securitization, with a focus on the residential mortgage-backed securities market. Dr. Sabry and Dr. Okongwu analyze the impact of securitization on the cost and availability of credit, as well as how securitization affects market liquidity and the distribution of risk based on an extensive review of loan-level and other data.

The study found that securitization has produced significant economic benefits in certain markets. Specifically, the study highlights that:

• Securitization lowers the cost of consumer credit, reducing yield spreads across a range of products including mortgages, credit card receivables, and automobile loans.
• Increases in secondary market purchases and securitization of mortgage loans have positive and significant impacts on the amount of mortgage credit available per capita, particularly among traditionally underserved populations. Conversely, declines in secondary market purchase and securitization activities negatively impact the amount of available mortgage credit. The analysis controls for the credit quality and demographics of the loams.
• A reduction in securitization activity has a negative impact on all types of lending activity, including but not limited to residential mortgages. The study predicts that bank lending activity is likely to be significantly and negatively impacted if securitization remains at its current, depressed level.